FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Organizational Structure and Performance Measurement

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Reference: 12-05 The Holmes Division recorded operating data as follows for the past year: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 200,000 \\\hline \text { Net operating income } & 25,000 \\\hline \text { Average operating assets } & 100,000 \\\hline \text { Stockholders' equity } & 80,000 \\\hline \text { Residual income } & 13,000 \\\hline\end{array}$ -Last year, a company had stockholder's equity of $160,000, net operating income of $16,000 and sales of $100,000. Was?

A) 9%.
B) 7%.
C) 10%.
D) 8%.

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Reference: 12-11 The Millard Division's operating data for the past two years are provided below: $\begin{array} { | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Return on investment } & 12 \% & 36 \% \\\hline \text { Stockholders' equity } & \$ 800,000 & \$ 500,000 \\\hline \text { Net operating income } & ? & \$ 360,000 \\\hline \text { Turnover } & ? & 3 \\\hline \text { Margin } & ? & ? \\\hline \text { Sales } & 3,200,000 & ? \\\hline\end{array}$ Millard Division's margin in Year 2 was 150% of the margin in Year 1. -The turnover for Year 1 was?

A) 4.0.
B) 1.2.
C) 1.5.
D) 3.0.

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Reference: 12-01 The following information is available on Company A: $\begin{array} { | l | l | } \hline \text { Sales } & \$ 900,000 \\\hline \text { Net operating income } & 36,000 \\\hline \text { Stockholders' equity } & 100,000 \\\hline \text { Average operating assets } & 180,000 \\\hline \text { Minimum required rate of return } & 15 \% \\\hline\end{array}$ -Cable Company had the following results for the year just ended: $\begin{array} { | l | l | } \hline \text { Net operating income } & \$ 2,500 \\\hline \text { Turnover } & 4 \\\hline \text { Return on investment } & 20 \% \\\hline\end{array}$ Cable Company's average operating assets during the year were?

Reference: 12-02 The following data are available for the South Division of Redride Products, Inc. and the single product it makes: $\begin{array} { | l | l | } \hline \text { Unit selling price } & \$ 20 \\\hline \text { Variable cost per unit } & \$ 12 \\\hline \text { Annual fixed costs } & \$ 280,000 \\\hline \text { Average operating assets } & \$ 1,500,000 \\\hline\end{array}$ -The balance scorecard approach usually includes all of the following categories of measures except:

$\text { Reference: } 12 - 10$ Harstin Corporation has provided the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -The return on investment can ordinarily be improved by either increasing sales, reducing expenses, or reducing operating assets, assuming each of the other factors remain unchanged.

$\text { Reference: 12-11 }$ The Millard Division's operating data for the past two years are provided below: $\begin{array} { | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Return on investment } & 12 \% & 36 \% \\\hline \text { Stockholders' equity } & \$ 800,000 & \$ 500,000 \\\hline \text { Net operating income } & ? & \$ 360,000 \\\hline \text { Turnover } & ? & 3 \\\hline \text { Margin } & ? & ? \\\hline \text { Sales } & 3,200,000 & ? \\\hline\end{array}$ Millard Division's margin in Year 2 was 150% of the margin in Year 1. -Division B had a ROI last year of 15%. The division's minimum required rate of return is 10%. If the division's average operating assets last year were $450,000, then the division's residual income for last year was?

$\text { Reference: } 12 - 10$ Harstin Corporation has provided the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -Centralized organizations normally include multiple business segments.

Reference: 12-07 The following selected data pertain to the belt division of Allen Corp. for last year: $\begin{array} { | l | l | } \hline \text { Sales } & \$ 500,000 \\\hline \text { Average operating assets } & \$ 200,000 \\\hline \text { Net operating income } & \$ 80,000 \\\hline \text { Turnover } & 2.5 \\\hline \text { Minimum required return } & 20 \% \\\hline\end{array}$ -How much is the residual income?

Reference: 12-04 Estes Company has assembled the following data for its divisions for the past year: $\begin{array} { | l | l | l | } \hline & \text { Division A } & \text { Division B } \\\hline \text { Average operating assets } & \$ 500,000 & ? \\\hline \text { Sales } & ? & \$ 520,000 \\\hline \text { Net operating income } & \$ 100,000 & \$ 20,300 \\\hline \text { Turnover } & 1.25 & 4 \\\hline \text { Margin } & ? & 3.9 \% \\\hline \text { Minimum required rate of return } & 14 \% & ? \\\hline \text { Residual income } & ? & \$ 6,000 \\\hline\end{array}$ -Division A's sales are?

Reference: 12-02 The following data are available for the South Division of Redride Products, Inc. and the single product it makes: $\begin{array} { | l | l | } \hline \text { Unit selling price } & \$ 20 \\\hline \text { Variable cost per unit } & \$ 12 \\\hline \text { Annual fixed costs } & \$ 280,000 \\\hline \text { Average operating assets } & \$ 1,500,000 \\\hline\end{array}$ -How much is the return on the investment?

$\text { Reference: } 12 - 10$ Harstin Corporation has provided the following data: $\begin{array} { | l | c | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -Assuming that sales and net operating income remain the same, a company's return on investment will:

Reference: 12-02 The following data are available for the South Division of Redride Products, Inc. and the single product it makes: $\begin{array} { | l | l | } \hline \text { Unit selling price } & \$ 20 \\\hline \text { Variable cost per unit } & \$ 12 \\\hline \text { Annual fixed costs } & \$ 280,000 \\\hline \text { Average operating assets } & \$ 1,500,000 \\\hline\end{array}$ -If the South Division wants a residual income of $50,000 and the minimum required rate of return is 10%, the annual turnover will have to be?

$\text { Reference: } 12 - 10$ Harstin Corporation has provided the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -An investment centre has the highest level of responsibility from a performance management perspective.

$\text { Reference: 12-11 }$ The Millard Division's operating data for the past two years are provided below: $\begin{array} { | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Return on investment } & 12 \% & 36 \% \\\hline \text { Stockholders' equity } & \$ 800,000 & \$ 500,000 \\\hline \text { Net operating income } & ? & \$ 360,000 \\\hline \text { Turnover } & ? & 3 \\\hline \text { Margin } & ? & ? \\\hline \text { Sales } & 3,200,000 & ? \\\hline\end{array}$ Millard Division's margin in Year 2 was 150% of the margin in Year 1. -The average operating assets for Year 2 were?

Reference: 12-04 Estes Company has assembled the following data for its divisions for the past year: $\begin{array} { | l | l | l | } \hline & \text { Division A } & \text { Division B } \\\hline \text { Average operating assets } & \$ 500,000 & ? \\\hline \text { Sales } & ? & \$ 520,000 \\\hline \text { Net operating income } & \$ 100,000 & \$ 20,300 \\\hline \text { Turnover } & 1.25 & 4 \\\hline \text { Margin } & ? & 3.9 \% \\\hline \text { Minimum required rate of return } & 14 \% & ? \\\hline \text { Residual income } & ? & \$ 6,000 \\\hline\end{array}$ -Division A's residual income is?

$\text { Reference: } 12 - 10$ Harstin Corporation has provided the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -The return on investment for the past year was?

Reference: 12-01 The following information is available on Company A: $\begin{array} { | l | l | } \hline \text { Sales } & \$ 900,000 \\\hline \text { Net operating income } & 36,000 \\\hline \text { Stockholders' equity } & 100,000 \\\hline \text { Average operating assets } & 180,000 \\\hline \text { Minimum required rate of return } & 15 \% \\\hline\end{array}$ -Company A's residual income is?

$\text { Reference: } 12 - 10$ Harstin Corporation has provided the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -Support departments within an organization such as information technology, cannot be evaluated as profit centres as they have no external sales revenues.

Reference: 12-10 Harstin Corporation has provided the following data: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$ -During Cummings most profitable year its net income was $25,000. What is the ROI if the investment was $50,000?

Suppose the manager of the Axle Division desires a return on investment of 22%. In order to achieve this goal, the Axle Division must sell how many units per year?